The Republic of South Africa experienced 25 per cent unemployment in 2015, with youth and women being the most affected. In order to provide income security to these groups, the Government of South Africa established the Unemployment Insurance Fund (UIF) in accordance with the Unemployment Insurance Act (No. 108), of 1996. UIF provides protection for working-age South Africans in circumstances of unemployment and illness, and covers maternity and adoption leave. The UIF is governed by the Department of Labour, which is responsible for managing the fund and administering payments directly to the accounts of eligible claimants.
South Africa’s UIF is a mandatory and contributory scheme for all workers in the formal and informal sectors, including domestic workers who work more than 24 hours per month. While the UIF is inclusive, the public sector, those in training and skills development, migrant workers on temporary assignment and those who work on commission are exempt from the scheme. Those eligible for UIF contribute 2 per cent of their salary, 1 per cent paid by the employer and the remaining 1 per cent paid by the employee through monthly payroll tax collected by the South African Revenue Services, or paid directly to UIF by those in the informal sector or irregularly employed. Under the UIF those eligible can claim benefits for unemployment, maternity, illness and adoption, and survivor benefits are paid in the case of the contributor’s death. The unemployment benefit ranges from 38 per cent of income for high-income earners to a ceiling of 60 per cent of income for the lowest earners and can be paid for a maximum of 238 days. According to the UIF Annual Report of 2015, a total of 1,579,688 employers are currently registered with the UIF.
Unemployment insurance in South Africa dates back to 1966 when the first Unemployment Insurance Act was passed. However, coverage in early years remained very restrictive and exclusive. The expansion of the UIF in 1996 was essential to fulfill the principle equal rights. The main challenge in the scheme implementation has been the slow turn-around time for claims. South Africa’s UIF creates part of a national social protection floor that is essential in providing basic income security for working age groups.
Further Reading:
Republic of South Africa. Department of Labour (2012). Annual Report of the Unemployment Insurance Fund for the year ended 31 March 2012 (Report Number 298/2012). Accessed from http://www.labour.gov.za/DOL/downloads/documents/annual-reports/unemployment-insurance-fund/2012/uifreport2012.pdf on December 2016.
International Labour Organization (2010). South Africa labour administration and inspection need assessment. Labour Administration and Inspection Programme. International Labour Office, Geneva. Accessed from http://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---lab_admin/documents/publication/wcms_151314.pdf on December 2016.